A discussion on the subject of Money will be very futile if we fail to agree on what Money is and what Money is not.
In this article, we will try to establish a context on what Money is.
Of course, Money is not a new word, do we need to check the dictionary for the meaning of Money?, who doesn’t know what Money is? We spend and receive Money every day so why should we waste our time defining Money?
Well, let us do our due diligence.
When You hear the word Money, the first thing that comes to your mind is the legal tender of the country You are domiciled in.
I am a Nigerian living in Nigeria and hence when I hear money, what comes to mind is the Nigerian Naira.
Of recent, the US dollar has been screwing us all up, so most Nigerians also know the Dollar.
And of course, Nigeria was once a colony of the Queen so we know the “almighty” Pounds Sterling. Matter of fact, the Pounds was our de facto currency before we opted for something that sounded more “Naija” so we chose the Naira.
Other “Monies” or currencies as they are usually called include the heavy weight Kuwaiti Dinar, the Japanese Yen, the South African Rand, the Ghanian Cedi (or Dollar now), the Dirham in the Emiratis and the not-so-valuable Zimbabwean Dollar.
Now that we know a bit about the currencies or Monies of different countries, will it be sufficient if we define Money as the generally accepted means of exchange in a particular country of region?
To some extent, Yes! but to a large extent, not really.
…because, before these countries chose the currencies we mentioned above, people have been transacting. Are we to say they did not use “Money” in those transactions? No!
Before the invention of Fiat Money which by the way is the formal name of all the currencies we have mentioned so far, people have been trans-acting.
There was trade-by-barter with its many flaws; say I need a cup of Rice and I have a Cow, will I slaughter my Cow and cut a part for You so I can get a cup of Rice from my friend that has Rice? No!
Then, people opted for more exchange-able commodities; Cowry Shells, Brass, Copper and other forms of precious materials. These evolved till we have the fiat currencies we have now come to know as money today.
By the way, this is not supposed to by an Economics course, so I will not want to prolong the matter.
Lets take some formal definitions of Money then we can agree on our own definition.
The Business Dictionary defines money as :
“Anything of value that serves as a (1) generally accepted medium of financial exchange, (2) legal tender for repayment of debt, (3) standard of value, (4) unit of accounting measure, and (5) means to save or store purchasing power.”
Wikipedia.com defines Money as:
any object that is generally accepted as payment for goods and services and repayment of debts in a given country or socio-economic context. The main functions of money are distinguished as: a medium of exchange; a unit of account; a store of value; and, occasionally, a standard of deferred payment.
https://open.lib.umn.edu has as very short definition. They defined Money as:
anything that serves as a medium of exchange.
If You paid rapt attention to the definitions above, You will notice that some words are common in all of them.
Did You notice? Do You want to read them again?
Well, if You did not notice, here are the words that are common in all:
- ANY thing or object
So lets take our own premise from the words common to all the definitions.
Firstly, ANYTHING obviously means anything; Paper, Cigarette, Mirror, Affection, Body Parts, Sex, Alcohol, Crude Oil… just anything You can think of.
Secondly, ACCEPTED, the fact that You have ANYTHING does not mean it will be accepted, You have Paper, I have Paper, why should I accept your paper?.. Therefore for your anything to be qualified to be used as Money, it must be ACCEPTED
and finally EXCHANGE, without EXCHANGE, there wont be need for Money. You dont have anything I want, why should I give You my Money?.
Lets put it all together,
Money in my own words is ANYTHING that the other party finds VALUABLE enough to be ACCEPTED as means of EXCHANGING what they have for what You want. PERIOD!
In a more real life context, Money is anything that You can offer me and I am willing to take to give You what You want.
Talk about the popular cliche, “Use WHAT YOU HAVE to get WHAT YOU WANT”. That is the concept of Money in one phrase.
Are You still following me?
If Money is anything, why then do we place more emphasis on the Naira and Dollars and Pounds and Euros?
Because they are the most generally accepted means of exchange.
As we pointed out earlier, the ANYTHING you have does not necessarily qualify as MONEY if the people You want to transact with do not accept it. Of what use is your Slay Body to a Buddhist Monk? That might pass as a means of exchange to a Nigerian Politician but it doesnt count to a buddhist Monk..lol.
But Who doesnt want mint Benjamins?
In my next article in this series, I will attempt to establish what money is not.
Bookmark my blog or just watch the space.
We are going somewhere interesting.
We all gonna be rich!
Yours in the Hustle.
I am Seun Ogunmola I help People and Organizations to leverage on Technology to achieve their goals Faster, Easier and Cheaper.
I also write on diverse subject areas including Finance, Business, Productivity and Governance.